Element Fuels Holdings, a Dallas-area startup that plans to build the first greenfield oil refinery in the United States in nearly 50 years, announced Thursday that it is restarting efforts to build a major plant in the South from Texas.
The Brownsville, Texas, project has been proposed by entrepreneur John Calce at least twice previously through his startups ARX Energy and JupiterMLP, one of which resulted in a bankruptcy filing. The project was originally owned by a holding company that also owned Centurion Terminals.
Element is seeking to raise funds for the first phase, which will allow the refinery to process between 50,000 and 55,000 barrels per day of naphtha into gasoline. The company estimates the initial phase will cost about $1.2 billion, Mr. Calce said.
The company also said it was in talks with the U.S. Department of Energy to obtain Inflation Reduction Act funding.
Previous attempts at JupiterMLP failed “for many reasons,” said John Calce, CEO of Addison, Texas-based Element Fuels, which holds a Texas state permit to build the plant. .
The refinery will eventually process U.S. shale oil from fields in West and South Texas, Mr. Calce said in an interview.
“We were convinced by the United States,” he said to explain why he kept the project, adding that the country was “very, very long, with light crude and insufficient refining capacity.”
Element plans to build an on-site power plant, with a capacity of 165 megawatts per day, powered by hydrogen produced by the refinery. It is in negotiations with a credit counterparty for the refinery, and has entered into a long-term offtake contract with a counterparty for electricity, he said, without naming either party. .
“Financing is the hardest thing to get (for a new refinery),” said John Auers, managing director of refining consulting firm Refined Fuels Analytics. He said new refining projects could have a limited lifespan, with demand for gasoline expected to peak in 2030-2031, and demand for middle distillates such as diesel and jet fuel after 2040.
Element Fuels could turn its refinery into a petrochemical plant if such demand destruction occurs, or export the refined products to countries where electric vehicles are less adopted, Mr. Calce said. (Article written by Arathy Somasekhar in Houston, supplemented by Erwin Sweba in Hosuton and edited by David Gregorio)
